Business

U.S. Treasury Grants China ‘Direct Computer Link’ to Auction System

China no longer needs to go through Wall Street when it wants to purchase copious amounts of U.S. debt — they can go right to the source: the U.S. Treasury.

This is the Treasury’s “first-ever direct relationship with a foreign government,” according to a recent report from Reuters.

But what does this mean? It means that unlike every other central bank in the world, the People’s Bank of China won’t have to place orders for U.S. debt through the Wall Street banks appointed by the feds as “primary dealers” to bid on Treasury auctions.

U.S. Treasury Grants China Direct Computer Link to Auction SystemPresident Hu reviewing Chinese troops.

“China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn’t been necessary,” Emily Flitter writes for Reuters.

So how does China bid on U.S. debt? Simple: through a “direct computer link” to the U.S. Treasury’s auction system. China has been bidding on U.S. debt without working through the aforementioned Wall Street banks as “primary dealers” — although every other bank is required to.

Surprisingly (unsurprisingly?), the deal between the Treasury and China wasn’t publicly announced.

“Direct bidding is open to a wide range of investors, but as a matter of general policy we do not comment on individual bidders,” Matt Anderson, a Treasury Department spokesman, told Reuters.

Why keep it on the down low? Reuters posits that by keeping Wall Street’s knowledge of the debt purchases to a minimum, and therefore containing what is already a politically contentious debate, it’ll keep the prices down for China’s bank.

“China is preserving the value of specific information about its bidding habits. By bidding directly, China prevents Wall Street banks from trying to exploit its huge presence in a given auction by driving up the price,” Flitter writes.

And this isn’t the first time the U.S. Treasury has twist itself into all sorts of contortions keeping America’s largest creditor happy.

“In 2009, when Treasury officials found China was using special deals with primary dealers to conceal its U.S. debt purchases, the Treasury changed a rule to outlaw those deals,” Reuters reports.

“But at the same time it relaxed a reporting requirement to make the Chinese more comfortable with the amended rule,” the report adds.

The Treasury’s silence on the deal isn’t inadvertent. Reuters uncovered a handful of communications calling for discretion and advising spokesmen to answer questions pertaining to a direct foreign bidder with vague answers.

“Most hold the view that foreign accounts only submit ‘indirect bids’ through primary dealers. This will likely cause significant chatter on the street and many questions will likely come our way,” wrote one government official in an email viewed by Reuters.

U.S. Treasury Grants China Direct Computer Link to Auction SystemChinese President Hu Jintao and government officials gather on Tiananmen Gate to celebrate 60 years of Communism in this October 2009 photo.

“For questions more extensive or probing in nature, I think it prudent to direct them to the or Treasury public relations area,” the email added.

Considering the fact that China is America’s greatest creditor, as well as the fact that they are becoming increasingly antagonistic in cyber security attacks, maybe – just maybe – granting the Communist country a direct computer link to the treasury auction system isn’t the wisest decision.

Read the full Reuters report here.

Front page photo source: China Aid

Comments (77)

1 2
  • copatriots
    Posted on May 21, 2012 at 10:46pm

    Sing with me now…..

    One love, one world, let’s get together and feel alright.

    And so Revelation unfolds………

    Report Post »  
    • momrules
      Posted on May 21, 2012 at 11:00pm

      Yes Copatriots, yes it does. How people can still doubt is beyond me.

      Report Post »  
    • Stoic one
      Posted on May 21, 2012 at 11:20pm

      I would not allow a “direct link” with my family members…

      These people are one of two things; Idiots or plain evil- you decide, I have.

      OMG

      Report Post » Stoic one  
    • hidden_lion
      Posted on May 21, 2012 at 11:33pm

      It is called treason…America, sold to the highest bidder.

      Report Post » hidden_lion  
    • woodyb
      Posted on May 21, 2012 at 11:50pm

      Next week we send them the keys to Fort Knox!!!!!!!!!!!!!!!!

       
    • rickc34
      Posted on May 22, 2012 at 2:02am

      oh yeah Obama will show them what a great business man he is. Not like rommney who actually made money.

      Report Post »  
    • KICKILLEGALSOUT
      Posted on May 22, 2012 at 5:26am

      Another story that has been going around lately,

      A Chinese group known as “Sino-Michigan Properties LLC” has bought up 200 acres of land near the town of Milan, Michigan. Their plan is to construct a “China City” with artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens. Essentially, it would be a little slice of communist China dropped right into the heartland of America. This “China City” would be located about 40 minutes from both Detroit and Toledo, and it would be marketed to Chinese business people that want to start businesses in the United States.

      Report Post » KICKILLEGALSOUT  
    • KICKILLEGALSOUT
      Posted on May 22, 2012 at 5:27am

      And another story,

      Thanks to the trillions of dollars that the Chinese have made flooding our shores with cheap products, China is now in a position of tremendous economic power. So what is China going to do with all of that money? One thing that they have decided to do is to buy up pieces of the United States and set up “special economic zones” inside our country from which they can continue to extend their economic domination. One of these “special economic zones” would be just south of Boise, Idaho and the Idaho government is eager to give it to them. China National Machinery Industry Corporation (Sinomach for short) plans to construct a “technology zone” south of Boise Airport which would ultimately be up to 50 square miles in size. The Chinese Communist Party is the majority owner of Sinomach, so the 10,000 to 30,000 acre “self-sustaining city” that is being planned would essentially belong to the Chinese government. The planned “self-sustaining city” in Idaho would include manufacturing facilities, warehouses, retail centers and large numbers of homes for Chinese workers. Basically it would be a slice of communist China dropped right into the middle of the United States.

      The reality is that Sinomach is not looking only at Idaho. Sinomach is in discussions to develop “special economic zones” all over the United States.

      Report Post » KICKILLEGALSOUT  
    • historyguy48
      Posted on May 22, 2012 at 6:24am

      I wonder if Russia still gets the East coast and China the west coast?

      Report Post » historyguy48  
  • ccprotect
    Posted on May 21, 2012 at 10:46pm

    i know of this world govenment thing, i can see it myself ( when i watch star trek) but everyone need a home, from my direct family to my state to my country, with out it i feel lost. i love my family, i love my state and i want to still love my country but, thers a time when you have to turn your back on the ones you love in order to make things better. the distant relitive has turned against the family and it may be close the time to respond. hope for the next election to set things on a path to save our country.

    Report Post » ccprotect  
    • KevINtampa
      Posted on May 21, 2012 at 11:43pm

      CC, I think I understand you here. Your patience, your will, and your liberty are being tested and stretched thin. The thought of, “When is enough enough? When will the people around me realize what’s wrong? When will they do something to show they understand the peril of this country? When will my family wake the f up?”
      I will tell you this now and I hope you take it to your heart and carry this as truth with you, you are not the only one. There are others who get it as well, and we are many.
      You must have a Brave Heart and hold the line as long as humanly possibly; until their swords are right at our throats and not a moment sooner. It will be hard, and require strength that at times you doubt you have, but you must hold. If we do not hold long enough we will be picked off one by one, and the moment the swords are at our throats, there will be no one left who gets it.
      Pray for the strength of patience, pray for miracles, and most of all pray for those you fear are the most lost of all of us: your enemy. Pray they reach the realization that placing a sword to the throat of our liberty will be their ultimate demise and that they will not be given a chance to seek salvation. Perhaps this would be the greatest miracle of all, and it is certainly worth praying for.
      Be patient, and don’t go getting yourself picked off. The longer we wait, the more brothers we will have that have woken up when the UNITED call for a charge comes; it will be then that you are most needed.

      Report Post »  
  • Constructionist
    Posted on May 21, 2012 at 10:45pm

    Hmmmm… so what’s the additional revenue on trillions of dollars worth of purchases on the open market that will no longer happen? I see the administration is working hard to ‘create jobs and value’ for Americans again.

    Report Post » Constructionist  
  • heyjim55
    Posted on May 21, 2012 at 10:45pm

    What the hell is next? direct access to nuclear codes, direct access to the Federal Reserve which may have already happened. Direct access to all of our bank accounts, our phones, computers, perhaps Obama should just annouce that we are now officially China’s bitch!

    Report Post »  
    • lbk
      Posted on May 22, 2012 at 11:06am

      I guess the next thing we’ll see is a bg bonn fire on the White House lawn. Obama and his minions, along with the Leader of China burning our Constitution. Free Chinese flags for everyone!

      Report Post »  
  • doomytram
    Posted on May 21, 2012 at 10:38pm

    Don’t forget that China bought the AMC movie cinema chain the other day. I haven’t been to one of those money pits in a number of years, but if you do, then you will be getting fed some warm commie propaganda in your over priced seat real soon. Have you thought about how much a couple of trillion (how much we owe them in debt) can buy?

    Report Post » doomytram  
    • lfoa
      Posted on May 29, 2012 at 2:53pm

      Last I heard, they were dumping our bonds slowly….
      Once they held $1,500,000,000,000 of our debt….
      Now it’s closer to $1,100,000,000,000 ……

      Even they think it’s becoming worthless…..

      Report Post »  
  • ccprotect
    Posted on May 21, 2012 at 10:38pm

    we need to get this started before i am to old to fight or my powder expires.

    Report Post » ccprotect  
  • Baddoggy
    Posted on May 21, 2012 at 10:23pm

    Ping pong…that’s about all the Chinese I know….I think I am in trouble…

    Report Post » Baddoggy  
  • KidCharlemagne
    Posted on May 21, 2012 at 10:21pm

    Remember the Nixon Shock of August, 1971?:

    ———————————————————–
    “The Nixon Shock Heard ‘Round the World
    August 15, 2011

    By severing the dollar’s convertibility to gold in 1971, the president ushered in a decade of inflation and economic stagnation.

    Nixon and Safire put together a speech to be televised Sunday night. It had taken only a few hours during that August 1971 weekend for Nixon to decide to sever the nation’s last tenuous link to the historic American gold standard, a monetary standard that had been the constitutional bedrock (Article I, Sections 8 and 10) of the American dollar and of America’s economic prosperity for much of the previous two centuries.

    At least one Camp David participant, Paul Volcker, regretted what transpired that weekend. The “Nixon Shock” was followed by a decade of one of the worst inflations of American history and the most stagnant economy since the Great Depression. The price of gold rose to $800 from $35.

    The purchasing power of a dollar saved in 1971 under Nixon has today fallen to 18 pennies.
    http://online.wsj.com/article/SB10001424053111904007304576494073418802358.html

    We should be seeing the same conditions (if not worse) in the US today that we saw then….strangely enough though we are not….so what’s different now from what it was then?

    This most recent arrangement with the Chinese central bank ought to clue you in!

    Report Post »  
  • TRILO
    Posted on May 21, 2012 at 10:15pm

    The leaders in both political parties have sold their soul to the devil for power and to try and keep the ponzi scheme going for just one more election cycle. Every day we lose our freedoms and liberties. Today we learn the Chinese have direct access to purchasing our treasuries and the House votes to allow legal sanctioned government propaganda. I guess the Dept of Propaganda will need all the help they can get when our elected representatives keep selling us down the river.

    Report Post » TRILO  
  • NOBALONEY
    Posted on May 21, 2012 at 10:13pm

    When Treasury Secretary Timothy Geithner went with Secretary of State Clliton earlier this month for the negotiations I was suspecious. The deal for China to buy an American sibsidiary of the Bank of East Asia for 140 million dollars wasn‘t the only thing on China’s shopping list. AMC Entertainment Inc. for 2 Billion, and this unprecidented E-Z access to Treasury.
    President Nixon will always be remembered for beginning the nomalization of relations with Communists China, but the Obama administration may be remember for putting out the ‘For Sale’ sign.

    Report Post » NOBALONEY  
    • docgreen
      Posted on May 21, 2012 at 10:35pm

      Sh_t can you say New World Order? Then we have Obama selling out rights to the Oceans and mineral rights to the UN! Then he gives part of Alaska away to Russia, along with this he wants to reduce our nukes, military, cut its spending, and take away Europes defense shield! What the Hell else could he do? Oops I forgot one, Give the UN our military to defend them while wearing their Uniforms. What could be so wrong with this? Anyone see anything wrong? So now the UN is in control of parts of our Military?

      http://www.wnd.com/2012/05/u-s-soliders-forced-to-wear-u-n-logo/

      Last, obama is going to start signing executive orders for some of this stuff in June! Don’t forget the EPA and carbon credits that companies and people will have to buy from the UN. Drilling for oil and other mineral rights will be charged taxes and those taxes will go towards the UN, even though its on US Soil and Seas! He’s selling us down the River for a take over!

      Report Post »  
    • The-Monk
      Posted on May 22, 2012 at 12:17am

      @NOBALONEY

      The article said this has been going on since June 2011.

      Report Post » The-Monk  
  • lel2007
    Posted on May 21, 2012 at 10:02pm

    China? Sounds familiar. Isn’t China the primary source of computer systems hacking and virus? Only obama would give China a “direct computer link” to the U.S. Treasury’s auction system. Maybe China will get a direct link to NORAD’s computer systems if the Kenyan is re-elected, he‘ll have more ’flexibility’ in his second term.

    Report Post » lel2007  
    • heyjim55
      Posted on May 21, 2012 at 10:55pm

      That is correct Obama may just give away the launch codes to our ICBM’s what few we have left, Keys to NORAD, give California back to Mexico, Alaska to Russia maybe Florida to Cuba, Washington state to Canada. Oh I forgot he will be signing a Asian free trade agreement with Asian countries very soon (China Inc.) Which should just about kill what ever manufacturing jobs are left in America. Then all we will have left is unionized government workers and police ( also unionized) sounds like utopia doesn’t it.

      Report Post »  
    • The-Monk
      Posted on May 22, 2012 at 12:28am

      @lel2007

      A computer in the Chinese Government, that was built in China is connected the a computer in the US Government, that was built in China.

      I’ve been wondering what the Chinese can embed in the Chips or BIOS (CMOS) of computers that the US Government orders directly from China? Is this why the Chinese can hack our computers so easily?

      Report Post » The-Monk  
  • RANGER1965
    Posted on May 21, 2012 at 9:56pm

    The reason for this isn’t convenience. It’s a simple matter of public record. China bidding on US debt through banks, leaves a fat paper trail. How much they paid for the debt, and how much was bought can be discerned.

    When the US begins selling the debt dirt cheap they won’t want people to know how bad it is. By buying directly from a US treasury auction, this can be kept from the public eye.

    The Long Night is Coming.

    RANGER

    Report Post » RANGER1965  
  • campt1
    Posted on May 21, 2012 at 9:54pm

    The next generation will have to fight to get it all back-good luck with that!

    Report Post » campt1  
  • possom
    Posted on May 21, 2012 at 9:50pm

    If I was rich I’d move to singapore.

    Report Post » possom  
  • Snowleopard {gallery of cat folks}
    Posted on May 21, 2012 at 9:49pm

    Once again we have been sold out by the treason of Obama and his administration.

    Report Post » Snowleopard {gallery of cat folks}  
    • TRILO
      Posted on May 21, 2012 at 10:07pm

      And Congress, both the democrats and Republicans are silent. So don’t just blame the TOTUS.

      Report Post » TRILO  
    • CatB
      Posted on May 21, 2012 at 10:09pm

      Exactly .. and Dick Morris had some info on Hannity tonight about more treaties that Obama is planning on pushing through .. they can NOT be repealed and have the power of an ammendment to the Constitiution .. even if we throw him out in November it will be a long hard road to get our country back.

      Report Post »  
  • Legion5
    Posted on May 21, 2012 at 9:47pm

    Next the Chinese will be bidding on our House and Obama will give it away. I am sick of this turds crap and I wish I could send him a pile of what I think he is!

    Report Post » Legion5  
  • lassiegirldawn
    Posted on May 21, 2012 at 9:46pm

    Is this the way our Commie In Chief will get away with his debt limit raise, going around our political system and overriding all our security and the will of the American people. He did say he would by pass Congress to get what he wanted, and it looks like he sold us to his commie buddies.

    Report Post »  
  • DaytonConserve
    Posted on May 21, 2012 at 9:45pm

    The Obama administration takes chrony capitalism to a new level. New slight of hand.

    Report Post »  
  • KangarooJack
    Posted on May 21, 2012 at 9:44pm

    I read this and actually put my head into my hands and sighed. What on Earth is our OWN Gov’t doing to us!!??!!

    Actually, the better question is-What are WE ALLOWING OUR GOV’T TO DO TO US?

    Report Post » KangarooJack  
  • Maxim Crux
    Posted on May 21, 2012 at 9:40pm

    More Treason

    Report Post »  
    • CatB
      Posted on May 21, 2012 at 10:10pm

      Amen to that .. that is exactly what this is .. too bad no one with the power and the balls .. will call it that and take action.

      OMG 2012 LIBERTY!

      Report Post »  
    • lukerw
      Posted on May 22, 2012 at 2:18pm

      @CATB
      Ditto!

      Report Post » lukerw  
  • Darmok and Jalad at Tanagra
    Posted on May 21, 2012 at 9:38pm

    Wow, too bad it really was a link to E-bay.

    What the chinese will quickly find is Baseball trading cards are worth more than US treasury bonds.

    Report Post » Darmok and Jalad at Tanagra  
  • 9111315
    Posted on May 21, 2012 at 9:38pm

    I bet they get an admin level account.

    Report Post »  
  • lukerw
    Posted on May 21, 2012 at 9:36pm

    Do they get to Fluke Michelle, too?

    Report Post » lukerw  
  • shogun459
    Posted on May 21, 2012 at 9:35pm

    And now China is set to quietly buy the US Coal, Oil, Gold, Silver and any other resource, ( that the environmentalist have cut US OFF From ), directly without national review or restrictions.

    And you thought Japan buying the US in the 70′s was bad.

    Report Post » shogun459  
    • howardroark1165
      Posted on May 21, 2012 at 9:54pm

      Nope, they won’t have to buy the resources. First, they will buy enough debt, wait for us to default, then one of two things will happen.

      One possibility is they will demand collateral…. and the Fed has lots of land… out West…. of which every acre has it’s associated mineral right.

      The other possibility is, now that almost every mortgage is under the control of Freddy or Fanny (regardless of what bank services the loan), the fed just may put up all of those mortgages as collateral, so, all of our interest payments will start going to the ChiComs.

      I’ve seen this one coming for at least 10 years. Our Dear Leader has simply fast tracked the process.

      Travis

      Report Post » howardroark1165  
    • howardroark1165
      Posted on May 21, 2012 at 10:02pm

      ShoGun,

      They won’t have to buy our resources. Here’s the plan. Keep buying our debt at an accelerated pace and wait for us to default, or get close to default. At that time they will demand collateral. What does the Fed have to put up? Two things.

      Land and mortgages.

      Federal land, mostly out West, all of which has mineral rights.

      Almost all mortgages are now held by Freddy or Fanny (regardless of what bank services your loan, Freddy or Fanny has their hand in your pocket).

      So, when the ChiComs demand collateral the Fed will fork over Federal land and/or mortgages. I’ve seen this one coming for 10 years or so. The One has just fast tracked it.

      Report Post » howardroark1165  
    • shogun459
      Posted on May 22, 2012 at 9:43am

      Howard, don’t get bogged down in the small details. That’s how the Left controls there enemies, that’s you.
      How about a little outrage at the result?

      Oh and Hillary C. delivered a rite of emminant domain for all holdings of the US 2 years ago when the Chinese found out what “Quantative Easing” was. We just printed the money.

      Report Post » shogun459  
  • scuba13
    Posted on May 21, 2012 at 9:32pm

    What did you expect from the first Chinese President?

    Report Post » scuba13  
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